1 DGINS Conference September 2007 Budapest, Hungary Jan Plovsing National Statistician Measuring Economic Globalisation

2 Globalisation is not a new Phenomenon

3 Defining Globalisation in our Context The opening up of economies and borders thereby widening the worldwide interconnectedness. An increasingly integrated world economy. Resulting in an increase in: –trade in goods and services –capital movements (FDI and portfolio investments) –movements of people –spread of information, knowledge, technology and ideas Multinational Enterprises, MNE’s have an important impact.

4 Drivers of Globalisation: Increased Liberalisation of International Trade and Movement of Capital. Picture from 1375

5 Drivers of Globalisation 2: Opening up New Markets in the Global Economy Picture from 1898

6 Drivers of Globalisation 3: Technological Developments Lowering Costs for Transportation and Communication Picture from app – 1550

7 Globalisation of the Economy: Traditional cross-border trade is still growing rapidly … Total exports and imports as share of GDP in EU15 countries 25% 30% 35% 40% 45% 50% Exports of goods and servicesImports of goods and services

8 Globalisation of the Economy: … And FDI Even More Direct investment stocks from EU countries as share of GDP 5% 10% 15% 20% 25% 30% 35% 40% EU15 Euro area

9 The Papers Deal with Different Aspects of Economic Globalisation. In brief and perhaps unfair: The Swedish paper deals with the consequences of international sourcing. The Italian paper deals with the measurement of competitiveness. The Czech paper deals with the effect of MNE’s on statistical measurements. The Norwegian paper deals with the SNA revision in relation to international processing. The Eurostat paper is the most general. Discusses challenges in relation to the measurement of cross-border transactions and the structure and behaviour of businesses. A few common themes. I will therefore deal with the papers one at a time.

10 Consequences of International Sourcing - Sweden The paper addresses the issue of offshoring/international sourcing from two different perspectives: –Labour demand. The point of departure was redundancy notices from workplaces, and combining this with changes in imports to these workplaces. Workplaces having outsourced internationally and their job losses are hereby identified. Main result: Few lay-offs due to offshoring –Productivity analysis based on several statistical registers. Main results: Firms involved in international sourcing have a much higher productivity than Swedish enterprises on average. Especially manufacturing enterprises outsourcing their services support functions profit from the outsourcing process The paper is an excellent example of how existing registers can be used in new and innovative ways

11 Is this how we perceive globalisation? This is the 8.15 to Mumbai. It is carrying Indian commuters, on the way to do YOUR JOB

12 The EU Survey of International Sourcing. Are We Undermining Our Skill Base by Relocating R&D Activities out of Europe?

13 Measurement of Competitiveness - Italy The paper addresses the issue of how to measure competitiveness in a globalisation perspective. “EU to become the most competitive and dynamic knowledge-based economy in the world”. It is concluded that indicators and analyses should be developed at firm and sector level. The basic need is micro-data at firm level, and a specific longitudinal data base consisting of elementary data has to be created. ISTAT has implemented an experimental panel database for the years 1999 – The main problems have been confidentiality problems (access to administrative sources) and the huge expenses. Should such measures of competitiveness become an ESS priority?

14 The Role of Multinational Enterprises – Czech NSO The paper refers to the MNE’s as the crucial point in understanding globalisation and the MNE’s effects on the quality of data; e.g. the internal restructuring of the division of labour within a MNE can seriously influence the existing statistics. The issue of transfer pricing as an important factor influencing the quality of the statistics is mentioned. The paper, interestingly, also looks at international sourcing from the point of the receiving country; how sudden introduction of new technologies and organisation of labour by foreign MNE’s can distort the real GDP growth. The paper raises the question of how to provide a correct statistical description of a region after the introduction of huge MNE’s.

15 The SNA revision - Norway The paper addresses the challenges for national accounts and BOP statistics when goods are sent abroad for processing: –In the SNA revision it has been decided to change the prevailing recommendation of gross recording of goods sent abroad for processing to a net recording so that no imputed change of ownership takes place. –This implies that only the value of the processing service will appear in the balance of payments and in the national accounts as an intermediate consumption in country A. –It is agued that this decision will have negative implications for the analytical uses of the accounts for production and productivity analysis, as well as for environmental analysis. –The development of a new supplementary system based on gross recording is proposed.

16 The ESS Response to Globalisation - Eurostat The paper sets up an inventory of existing statistics (e.g. trade in goods and services statistics, FDI) and new initiatives addressing the globalisation issue (e.g. FATS and survey on International Sourcing). Some of the challenges for the ESS concerning relevance and quality of the statistics: –Harmonising statistics for cross-comparisons and understanding of what is going on: Trade and FDI, FDI and FATS, FATS and R&D etc. The ESS should define priority areas and timetable. –Compiling the transactions and structure of MNE’s. Risk of double-counting/underreporting. Exchange of information with other MS and EU is limited by national legislation. Concentration of data collection into one system?

17 –New types of transactions (e-commerce) are difficult to capture. –The valuation of transactions becomes increasingly difficult. Intra-group trade issues: transfer pricing, FDI via special companies set up for routing capital and processing trade. –Problems with classification of cross-border transactions: A good or a service? A portfolio investment or a FDI? –The EuroGroup register is a very demanding project during –Specific Community surveys of MNE’s using European sampling. –Using information from private providers. The ESS Response to Globalisation – Eurostat (2 )

18 Specific Questions to the Authors (1) Sweden The point of departure was job-losses due to globalisation. Any plans to study job creation (increased competitiveness etc.) due to globalisation? Italy What kind of new EU legislation should have the highest priority for establishing harmonised studies and indicators of competitiveness? Czech NSO “Globalisation is a challenge to search for brand new techniques and methods of statistical measurement”. Could you clarify this point?

19 Specific Questions to the Authors (2) Norway The reason for the change to the SNA was that goods sent abroad for processing should be treated in the same way as goods sent to a domestic enterprise for processing. Why a different treatment in the two cases? Eurostat The paper mentions a lot of new challenges in relation to statistics on globalisation. When the present program of ESS statistics (including for example FATS) is implemented what kind of new EU legislation should then be taken on board?

20 Questions to the Authors and General Discussion (1) The role of Eurostat and the NSI’s –The ultimate aim of the EuroGroup register is to cover all MNE’s in Europe. The present project should be implemented Is the amount of work well understood and the timetable feasible? –European sampling. Which type of surveys would be relevant for this approach? Should the results be presented only as EU aggregates? –Confidentiality reasons make it difficult / impossible to exchange information on MNE’s across borders. Should data collection on MNE’s and their transactions be concentrated into one system, i.e. Eurostat? –Should analyses of competitiveness have a similar position as analysis of productivity and be part of official statistics?

21 Questions to the Authors and General Discussion (2) Satellite accounts are suggested –Should we use this method even more? Should they be voluntary and later on obligatory? –Norway: Gross recording of international processing for the environment-, production-, productivity analysis etc. –Sweden: To track goods, services and people across borders, not only up to the borders. Threats to official statistics? Are we still on track? –Using data from private sources (Eurostat) –More use of expert guesses and modelling (Czech NSO) –The need to provide timely imperfect data (specifying the level of quality) that could be later strongly revised (IT)

22 Sport is a Really Global Activity Thank you for your attention! picture from 1881